DrumBeat: August 21, 2008

The world actually has enormous spare oil capacity. It has simply moved. In the past, major oil producers like Saudi Arabia controlled it. But for years the world’s major consumers have bought extra oil to fill their emergency petroleum reserves.

Moreover, whereas the world’s reserve supply once sat in relatively inaccessible pools, much of it now sits in easily accessible salt caverns and storage tanks. And consumers control the spigots. During a supply disruption, Americans would no longer have to rely on the good will of foreign governments.

(Bloomberg) -- Crude oil jumped more than $5 as the dollar slumped and the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt the flow of oil.

Energy and metals futures also climbed as the U.S. currency fell the most against the euro in more than a month. The missile shield has ``a real anti-Russian potential,'' Russia's Foreign Ministry said. Russia is the world's second-biggest oil producer.

MEXICO CITY (Reuters) - Mexico's crude oil production dropped 10 percent in the first seven months of 2008 to an average of 2.845 million barrels per day (bpd), state-owned energy monopoly Pemex said on Thursday.

Pemex said in a release that crude oil exports in the January-July period dropped 16.3 percent to an av

What worries Jason Box, an associate professor of geography at Ohio State, and his colleagues, graduate students Russell Benson and David Decker, all with the Byrd Polar Research Center, even more about the latest images is what appears to be a massive crack further back from the margin of the Petermann Glacier.

That crack may signal an imminent and much larger breakup.

“If the Petermann glacier breaks up back to the upstream rift, the loss would be as much as 60 square miles (160 square kilometers),” Box said, representing a loss of one-third of the massive ice field.

“Environmental changes caused by global warming will not only affect human living conditions but may also generate larger societal effects, by threatening the infrastructures of society or by inducing social responses that aggravate the problem,” he wrote. “The associated socio-economic and political stress can undermine the functioning of communities, the effectiveness of institutions, and the stability of societal structures. These degraded conditions could contribute to civil strife, and, worse, armed conflict."

Peru is considering sending in the army to break up protests by Amazonian Indians who claim the government is preparing a massive land grab in the country's remote jungles.

Indigenous groups have blockaded roads and a river and set up pickets at energy installations to protest changes in the law which would make it easier for commercial interests to buy up collectively owned tribal lands in the northern regions of Peru.

Economists have long argued that for India to mimic China's "long boom", the country would have to see industry fuel growth. In China, this led to millions of people leaving the land to work in factories. But this process has not happened in India, where growth has been driven by capital-intensive sectors such as information technology. Although hugely successful, Indian software companies employ only 1.5 million people - a mere drop in the labour pool of 470 million.

However, the planning commission says that in the next five years the bulk of new jobs will be created in factories, construction sites, restaurants, retail stores and warehouses.

With fossil fuel prices escalating and countries searching for ways to reduce oil dependence and greenhouse gas emissions, capturing the earth’s heat for power generation is garnering new attention. First begun in Larderello, Italy, in 1904, electricity generation using geothermal energy is now taking place in 24 countries, 5 of which use it to produce 15 percent or more of their total electricity. In the first half of 2008, total world installed geothermal power capacity passed 10,000 megawatts and now produces enough electricity to meet the needs of 60 million people, roughly the population of the United Kingdom. In 2010, capacity could increase to 13,500 megawatts across 46 countries—equivalent to 27 coal-fired power plants.

BRUSSELS, Belgium - NATO has received a note from Moscow saying Russia is halting military cooperation, in the latest sign of tension over the violence in Georgia, an official said Thursday.

NATO spokeswoman Carmen Romero said the alliance had received notification through military channels that Russia's Defense Ministry had taken a decision "to halt international military cooperation events between Russia and NATO countries."

BAGHDAD - Secretary of State Condoleezza Rice and Iraqi Foreign Minister Hoshyar Zebari said Thursday the two countries have agreed that timetables should be set for the withdrawal of U.S. troops from the battle-scarred country.

While many Americans worry about high energy prices and the economic woes that go with them, Gary Terrell has the luxury of being able to take the long view.

Terrell has felt the pain at the pump, but the 55-year-old also has seen the upside of rising energy costs: The economy on the western slope of Colorado, where he lives, is benefiting from the rising prices because of its rich natural gas reserves. While much of the rest of the country suffers through a housing crisis, the local boom enabled him to profit handsomely on the recent sale of his home and position himself well for retirement.

Americans are expressing deep concern about US dependence on petroleum, rising energy prices and the threat of climate change. Unlike the energy crisis of the 1970s, however, there is a lurking fear that, now, the times are different and the crisis may not easily be resolved.

The Long Descent examines the basis of such fear through three core themes:

● Industrial society is following the same well-worn path that has led other civilizations into decline, a path involving a much slower and more complex transformation than the sudden catastrophes imagined by so many social critics today.

● The roots of the crisis lie in the cultural stories that shape the way we understand the world. Since problems cannot be solved with the same thinking that created thyem, these ways of thinking need to be replaced with others better suited to the needs of our time.

● It is too late for massive programs for top-down change; the change must come from individuals.

Hope exists in actions that range from taking up a handicraft or adopting an "obsolete" technology, through planting an organic vegetable garden, taking charge of your own health care or spirituality, and building community.

TEHRAN (Reuters) - The head of the National Iranian Oil Company (NIOC) travels to energy-hungry China next week to broaden cooperation, the Oil Ministry said on Thursday, a move that reflects Iran's increasing efforts to draw Asian investors.

China's industrial heartland is facing crippling power shortages, with more than a dozen provinces already rationing electricity.

The country is suffering from its biggest power crisis since 2004, when a 40-gigawatt shortfall left three quarters of China in the dark.

Since then, demand for electricity has doubled, but the government has fixed the prices of both coal and electricity below the market rate to try to keep a lid on inflation. China relies on coal-fired power stations for more than 80pc of its electricity generation.

The vulnerability of the UK gas market to price shocks was highlighted again yesterday after a leak on a pipeline in Norway triggered a 14 per cent rise in wholesale prices amid concerns that it could lead to reduced imports and a supply squeeze this winter.

One of the world's largest tire manufactures has announced forthcoming price increases, citing a shortage of raw materials.

Bridgestone Firestone North America has just announced that customers can expect to pay up to 10 percent more for replacement tires when they next visit their service centre. The increases will affect passenger and light truck, truck and bus, motorcycle, agricultural and off road tires.

The price of oil has dropped around 20 percent in recent weeks, but remains more than double what it was just a couple of years ago. The high price has given oil companies the incentive to revisit old fields long ago abandoned as unprofitable. As VOA's Greg Flakus reports from Austin, Texas, new technology has made it possible to extract more oil from these old fields.

What the documentary didn't note was that some suburbs, including some neighborhoods in Madison County, are becoming part of the solution. Our multiuse neighborhoods like The Township at Colony Park in Ridgeland and The Town of Lost Rabbit in Madison feature nearby offices as well as shops, limiting the amount of gas needed to get from home to office and back again.

There is also the aspect of telecommuting, which could allow some to work from their homes.

I don't believe surburbia will end, but the documentary and current events are convincing me that eventually surburbia will change from what we know it as today.

Matthew Simmons, founder and Chairman of Simmons & Company International, an independent investment bank specializing in the entire spectrum of the energy industry, will deliver the opening day keynote address on Thursday, November 20th. Author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, Simmons is world-renowned for his insights in the arenas of energy and Peak Oil.

Walcha grazier, Andrew Burgess, wants to do the clean, green thing and install a big wind generator on his farm, but all he has done so far is to bounce off a thick bureaucratic wall.

The only way he can justify the expense of a 10-kilowatt wind turbine, which would have the capacity to supply electricity to three houses, workshop and woolshed, and two large water pumps on his property, “Ruby Hills”, is to be paid for feeding surplus energy to the power grid.

And here’s the rub: while Mr Burgess pays Country Energy about 15 cents a kilowatt hour for mains power, Country Energy will only pay him three to five cents/kW hour for the energy he would feed back to the grid from the wind turbine.

The greening of Nevada is under way, but the ultimate goal of true sustainability is no easy task. Even so, there is a simple and very powerful concept that can guide us much of the way: localization. By its very nature, it applies to everyone and could have a profound impact on our homes, making them more affordable, independent and self-sufficient.

It will be our plates, not our rates, that bear the brunt of water shortage. As today's report from WWF spells out, the amount we spew out of taps is piddling compared with what it takes to make stuff and, especially, to grow our food.

The volumes involved are staggering: the 200 billion litres a second it takes to grow the world's food is like gulping down the Amazon day in, day out. In the UK, we use about 58 bathtubs full of water every day, both directly and in the food we eat and the clothes we wear, and 62% of that comes from other countries. We're eating dry Lake Naivasha in Kenya and Australia's Murray River, as well as running down our own reserves.

Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.

But when the Commodity Futures Trading Commission examined Vitol's books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.

The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.

So far the Chinese economy has withstood the global slow-down, maintaining GDP growth above 10 percent per year. The Shanghai Composite index, however, has fallen more than 60 percent from its 2007 peak — an indication of what China can expect when the euphoria from the Olympics has faded. Falling crude oil demand from China would threaten long-term support at $100.

Russian oil output growth is unlikely to exceed 2.2% next year and will slow to under 1% by 2011, the government said today, confirming earlier forecasts of a slowdown in production growth.

Falling oil production in Russia has become a major concern for the government, which relies heavily on export revenues.

The Kremlin quoted the Economy Ministry's updated forecast for Russian economic development to 2011 as saying oil output could this year reach 492 million tonnes, or 9.85 million barrels per day, almost flat from 491.5 million tonnes, or 9.87 million bpd, in 2007. This year, a leap year, has one extra day.

POTI, Georgia (AP) — Russian forces blocked the only land entrance to Georgia's main oil port city on Thursday, a day before Russia promised to complete a troop pullout from its ex-Soviet neighbor.

Armored personnel carriers and troop trucks blocked the bridge to the Black Sea port city of Poti, and Russian forces excavated trenches and set up mortars facing the city. Another group of APCs and trucks were positioned in a nearby wooded area.

Although Russian President Dmitry Medvedev has promised that his forces would pull back by Friday, Russian troops appear to be digging in, raising concern about whether Moscow is aiming for a lengthy occupation of its small, pro-Western neighbor.

CHITA, Russia: Mikhail Khodorkovsky, a former oil tycoon in Russia who was jailed, told a parole hearing in a Siberian court on Thursday that he does not plan to return to the oil industry where he made his fortune.

Khodorkovsky - who headed the Yukos oil company and was once Russia's richest man - has been in jail for almost five years in the Siberian region of Chita, some 3,600 miles (6,000 kilometers) east of Moscow. He was sentenced in 2005 to an eight-year term for tax evasion and fraud and is eligible for parole under Russian law.

In early July, U.S. airline stocks were so battered you could buy one share each of five big airlines for less than the cost of checking a single bag.

With oil prices then approaching $150 a barrel and air travel demand sinking, Wall Street's view was that most of the USA's airlines were destined for bankruptcy reorganization — some for liquidation — when their cash ran out within 18 months. One or two, the thinking went, would be toast by spring.

Now the summer season's end is approaching with an eight-day Labor Day travel period for which the airlines' trade association forecasts a sobering 6% drop in demand from a year ago. Yet conventional wisdom about airlines' survivability is changing rapidly, thanks in large measure to a $30-plus drop in the price of a barrel of oil.

The central problem in repeating Keynes’ exercise is that today the resource constraint has started to become compelling. In 1930, Keynes could extrapolate indefinitely the 2-per-cent-a-year growth of productivity and living standards that had been customary in “progressive countries” once modern industrialism had begun. The magic of ­compound interest is such that, over a century, growth at two per cent a year multiplies seven times. Keynes could assume – very reasonably – that the world’s production and consumption of oil, coal, copper, steel and so on would rise several-fold over the next 100 years.

By contrast, we cannot assume anything of the kind. The biggest problem comes with the most important single commodity, oil. Back in 1930, the motorcar and aeroplanes had been invented, but only a small fraction of the world’s population had driven a car or flown in a plane. The world’s oil consumption was about 5m barrels a day. Nowadays, with tens of millions more Asians becoming motorised and jet-lagged for the first time every year, the world’s oil consumption is 85 barrels a day, up 17 times from its 1930 level.

The reality is that whether the U.S. drills or not, it really doesn't make a difference — not against the sheer scale of the energy and climate crisis facing America and the rest of the world. (Indeed, the other 6.3 billion people factor into this equation too.) The International Energy Agency (IEA) recently estimated that under a business-as-usual scenario — which the U.S. seems intent on abiding — global oil demand would rise 70% by 2050. That increase represents five times as much oil as Saudi Arabia produces annually. You could drill America with exploratory wells until it looked like Swiss cheese and still not make much of a dent in that figure.

The County Board of Supervisors will be holding a hearing next Tuesday morning, August 26, to discuss the ongoing energy crisis in our region, state and country. With “peak oil” perhaps already here, or arriving soon – as more and more respected analysts now agree – this hearing is timely. While the Community Environmental Council is convinced that peak oil is a very serious problem, we are concerned that the growing awareness of this slow-moving crisis will lead to some bad choices regarding solutions.

A Toxic Spew?: Officials worry about impact of 'fracking' of oil and gas.

Cathy Behr says she won't forget the smell that nearly killed her. An emergency-room nurse in Durango, Colo.'s Mercy Regional Medical Center, Behr was working the April 17 day shift when Clinton Marshall arrived complaining of nausea and headaches. An employee at an energy-services company, Weatherford International, Marshall, according to Behr, said that he was caught in a "fracturing-fluid" spill. [Fracturing chemicals are routinely used on oil and gas wells where they are pumped deep into the ground to crack rock seams and increase production.] The chemical stench coming off Marshall's boots was buckling, says Behr. Mercy officials took no chances. They evacuated and locked down the ER, and its staff was instructed to don protective masks and gowns. But by the time those precautions were enacted, Behr had been nursing Marshall for 10 minutes--unprotected. "I honestly thought the response was a little overkill, but good practice," says Behr, 54, a 20-year veteran at Mercy.

A few days later, Behr's skin turned yellow. She began vomiting and retaining fluid. Her husband rushed her to Mercy where Behr was admitted to the ICU with a swollen liver, erratic blood counts and lungs filling with fluid. "I couldn't breath," she recalls. "I was drowning from the inside out." The diagnosis: chemical poisoning.

"Food prices tend to go up pretty quickly and they tend to stick on the way down," said Jim Sartwelle, an economist with the American Farm Bureau, which tracks retail food prices on a quarterly basis.

That's bad news for U.S. consumers still struggling with high costs for fuel and household goods, and worse for people in impoverished countries like Haiti and Senegal, where violent food riots broke out earlier this year as world food prices peaked.

AMES, Iowa, August 20, 2008 (ENS) - A method of making potentially cheap ethanol fuel out of garbage and other waste materials by deploying a combination of modern and old technologies is under development by government and university researchers.

The process involves the use of nanotechnology and gasification to convert carbon-based materials into a product called synthesis gas, or syngas, which in turn can be made into ethanol.

Alofi, Niue - Climate change is wreaking havoc in the small island states of the South Pacific and assistance is needed for those already hit by rising seawater and severe storms, an islands leader said on Wednesday.

Pacific Islands' Forum chairperson and Niue Premier Toke Talagi said the frequency of severe cyclones and rising sea levels meant the challenge of climate change is no longer a matter of scientific theory.

TAIPEI (AFP) - "Ghost Month" in Taiwan draws out devotees who prepare food offerings, burn incense sticks and ritual paper money, and set off firecrackers to honour their ancestors as well as wandering spirits.

According to folk tales, the gate of hell opens annually during this time -- the seventh month on the lunar calendar which this year falls in August, letting its dwellers come to the human world to feast.

But as concerns about the environment and global warming grow, authorities and religious groups are calling for a change to the old ways of worshipping.

NEW YORK (Reuters) - Eight scientific organizations urged the next U.S. president to help protect the country from climate change by pushing for increased funding for research and forecasting, saying about $2 trillion of U.S. economic output could be hurt by storms, floods and droughts.

I hate to say it, but reality seems to be taking more plot twists and turns than a Tom Clancy novel:

All kinds of conflicting reports on GoogleNews relating to whether a Russia-Syria alliance means the basing of an Iskandar missle system on Syrian soil. Purely for defensive purposes; same as the Patriot ABM Battery in Poland. Additionally:

http://macedoniaonline.eu/content/view/2940/53/
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The Russian aircraft carrier “Admiral Kuznetsov” is ready to head from Murmansk towards the Mediterranean and the Syrian port of Tartus. The mission comes after Syrian President Bashar Assad said he is open for a Russian base in the area. The “Admiral Kuznetsov”, part of the Northern Fleet and Russia’s only aircraft carrier, will head a Navy mission to the area. The mission will also include the missile cruiser “Moskva” and several submarines, Newsru.com reports.
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Except that FF prices have been rising for some time now, and oil in particular has been rising for 9 years, currently up ~1150% - to pay the required interest the banking system must have growth, which is powered in part by growing oil use.

Econ 101 says you get less consumption if prices rise ... so, if the prices rise for long enough and far enough (and 1150% is quite far!) at some point growth based on that oil consumption must stop! ... and indeed it did ... about 4 years ago!

By 2 years ago the financial system was trying any trick to keep the growth going, but eventually that had to fail if there is no growth in the energy powering the world economy.

The downslope of world consumption post peak-oil implies that the oil is getting ever more expensive year after year in the 'net importing' countries, since we will have no option but to use less and less of it.

An (overly) simple way to look at it is that when the dollar falls, the price of oil must go up, or else it will be devalued. Since it's a real and valuable thing, unlike a fiat currency, that wouldn't be right, and would confer an advantage to foreign buyers. I find it harder to argue that higher oil prices must lead to a lower dollar, however...that would be wagging the dog. Still, as a matter of trade balance, I grant that there is a bit of a chicken-and-egg story there.

round and round the mulberry bush
the monkey chased the weasel
the monkey thought it was all in fun
pop goes the weasel...

The weasel, purchased at a local Wall Mart on a Visa credit card, was really a high tech, Japanese designed robot made in China. It was powered by a lithium battery that was being charged by a diesel generator made in France. The French diesel manufacturing plant was on a nuclear energy supplied grid...

The falling $ is a response to a balooning trade deficit. The fact this has not happened much, much sooner needs to be viewed as anomalous.

If you run a current account deficit you're by definition running a capital account surplus. The money comes back as various kinds of foreign investment in companies and assets, loans etc. A current account deficit is not debt; nobody is owed something as a result of running a trade deficit. It can be transformed into debt(e.g. by lending this money to uncle Sam) but it doesn't have to be.

You could equally well say that America managed once again to attract more investment from foreigners than americans invested in foreign companies; the only way you'll be able to do this is if foreigners believe in the future profitability of american companies.

Bloomberg thinks oil is up because of yesterday's TWIP. This of course fails to explain why oil went down for several hours after the TWIP came out. I would be surprised if anyone was worried about Fay at this point. It isn't much of a storm. My 80-year-old mother was out driving in it yesterday.

I think oil is up because demand is up. Gasoline is back to ~$3.50/gal around here, and the roads are noticeably busier. US imports were up 1.3 million barrels/day last week. I suspect the
Chinese have started to buy again. Even if they're shut down for the Olympics, oil they buy today won't be there till the Olympics are about over, and their refiners will need time to process it.

I don't know if oil is ready to make it's next move up, but I think we're getting close to that point. If so, a lot of commentators who have been crowing about oil's recent decline are going to look rather silly.

Don't forget about the 2008 Beijing Paralympics from Sep 6 - 17. China may still cut their industrial output for these games. However, maybe not since they aren't popular and I don't think anyone will be watching them.

From 5/07 to 6/08, monthly oil prices went up at an average rate of 6% per month, with two monthly declines, August & December. Following the August decline, average monthly prices in September rebounded by about 10%.

It's not only oil but also look out for coal. I have heard from my Chinese contacts that a big cut-back has been in place for several weeks in order to clean up for the Olympics. When full demand is restored in a couple of weeks the coal stocks will soon start to run down. Following the ELM model increasing internal consumption will result in less coal exports with possible imports, i.e. more demand less supply in the world markets.

"Coal: This in my opinion is slightly more likely than oil to bring the system down. Here the effects of export-land model (courtesy Jeffery Brown) are even more pronounced. China consumes more than 2.5 billion short tons of coal per year. It recently turned a net importer (2008 projected). The world export market is tiny and is less than 12% of the world coal production. China's coal consumption is rising at a 12-15% compounded annual rate. China's coal production growth rate is slowing dramatically and will rise less than 5% this year. Putting these numbers together means that China will swallow all of the worlds exports in 2-4 years. Unless coal production can be ramped up dramatically elsewhere it is lights out everywhere."

And a lot of Middle Eastern oil exporters, e.g. Saudi Arabia, had been talking about importing coal, because of the shortfall in natural gas supplies, in order to free up more oil for export.

My estimates for Saudi Arabia for this year are as follows:

Total Liquids: 10.9 mbpd
Consumption: 2.5
Net Exports: 8.4

At their current rate of increase in consumption, in 10 years they would have to be producing 13.4 mbpd, a 2%/year rate of increase in production, to have 2018 net exports of 8.4 mbpd (their 2005 net export rate was 9.1 mbpd, EIA).

Plus now we're kicking in to the point where a number of system spec traders have gotten the signal to close out their short positions. The longer the price stayed in a narrow range, the lower that price signal got.

I think all of these explanations reek of "Narrative Fallacy"(yes, another Black Swan reference). Often, there is no discernible reason, or no single reason for these movements. Sometimes there really is no reason. People like "stories" so they think up reasons...the more plausible the better; the "story" is not the TRUTH, the same way that the map is not the territory.

Oil watchers said the market's sudden reaction to the standoff reflects a growing acknowledgment of Russia's bear-like influence over world energy supplies.

"People are finally realizing that this Russian situation has the potential to be bad for a very long time," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. "The Russians have shown evidence that they're willing to cut off energy supplies to advance their aims. There is concern that they are now going to be much more assertive in that area."

Germany suffered a humiliating surrender (and loss of territory) followed by economic collapse. Russia has gone through economic collapse followed by humiliation and loss of territory.

In "The Putin System" documentary, there is a scene where Putin re-establishes some military ceremonies and several of the senior generals are visibly weeping with emotion. I think that there is a real sense of loss and grievence in the Russian armed forces. There is probably a sizeable group of officers who would relish kicking the US out of the Middle East just as payback.

We know from history books that all the parties involved seriously underestimated the duration and savagery of WW1. Let's hope that nobody tries to "restore Georgia's freedom" thinking that it will be easy.

The supply of oil and gas is much larger than imagined by the pessimists. Opportunities exist to decrease the global consumption of oil radically while maintaining a healthy economy.The environmental impact of fossil fuels is the most serious problem the world faces today. But a portfolio of solutions can solve it.

Apparently the book is not out yet. It'd be interesting to get a professional review of the book, the arguments and the data used.

The discussion is sorely lacking an honest, trained and data backed opponent that doesn't resort to mere ad hominems and references to classified data when doing counter-argumentation.

My expectations are not high for the book, but at least the guy is a geologist so should understand flow rates and he works in the oil industry, which should give some reality to the situation

I would like for him to explain why other regions--and the world--would have conventional production profiles different from Texas & the North Sea, especially given the oil price environment for the initial production decline in both cases, i.e., higher oil prices = lower crude oil production.

I suppose we should admit that it is just theoretically possible that, at any point along the way, everyone could just throw up their hands, say "to hell with it!", turn off all the taps, and production would immediately plummet to zero.

This would never happen in the real world, of course, but it is the one case I can think of that would produce plots that look different from the ones you have posted above.

IMO JD has the best site for debunking, and even his arguments are pretty weak. This author doesn't even admit that cheap oil has peaked and is in decline, so his credibility is suspect. IMO what oil depletion experts should attempt to estimate is the % of global oil deposits that will never be extracted/exploited because of low EROEI-I think this % is a lot higher than currently assumed.

I once tried to talk to JD but he has a very loose relationship with reality. Once he mentioned that we were going to get our energy from outer space I broke off the conversation because I knew the effort was pointless.

The design doesn't scale down to a practical, containable system. And even if it did, the power density is only ~2 milliwatts/kg; pathetic even by hamster-wheel standards. You'd need 0.5 million metric tonnes of hydrogen plasma just to get 1 MW of power.

The power output, frequency spectrum and size of the reactor to vary over its useful life; and when the reactor finally wears out it has an annoying tendency to explode violently, killing inhabitants situated within a few parsecs and emitting vast amounts of radioactive waste and toxic heavy metals.

During operation you need to shield yourself from deadly radiation with a magnetic field and a thick layer of gas to allow transmission of light to the collector.

The efficiency leaves much to be desired with our current strategy of capturing light using a small dust speck 93 million miles away from the reactor. Less than a billionth of the power output even impinges on the collector and only 4 thousandths of that is used for production of biomass; the rest must be discarded as waste heat from the collector by radiating it to space at a carefully controlled rate to keep the collector at a habitable temperature.

1) The world petroleum stockpiles (SPR etc.) will prevent any problem from affecting us. Take out the Saudi oil loading facilities and you effectively loose over 9 MBD production that won't be coming back for a year or two. At that point, I don't think the word's petroleum stockpiles will last very long. There has yet to be any serious attack on the facilities. The several pick-up trucks with AK-47’wielding fanatics that tried to run the main gates don’t even begin to count.

2) I worked on a black project in the 80's to protect the Strait of Hormuz from Silkworm missiles. His comment that 20 miles of ocean are more than enough space to prevent any shipping problems shows a frightening ignorance of modern missile technology.

If the extracted comments are some of his best work, I'm very unimpressed.

I'm way late here, but it seems that the author is making a huge assumption that all tankers will continue to attempt to run the strait after some are taken out-- that is, that a tolerable percentage will not make it, but all will continue to try. Seems to me that Lloyd's of London will have more influence what actually happens.

LONDON (AFP) - World oil prices extended gains on Thursday following a bigger-than-expected drop in inventories of US motor fuel.

There was that huge increase in crude oil inventories in the U.S. yesterday. Why would crude oil prices keep going up if crude oil inventories are increasing? Why would gasoline stocks have anything to do with it other than indicate that demand is increasing? You'd think that crude oil supply would be more of a driver for prices than refined products supply. Unless of course that huge increase really was just a one-time blip because of weather/saudis/etc. as discussed yesterday.

Generally, I think that tracking crude inventories is not a good way to try to determine what is going on in oil markets (although I think that the Gulf Coast situation this summer was a special case). In any event, here was my 9/07 take on the issue:

I think it depends on why the inventories rose. If inventories rise because sales of finished product are faltering, then that is bearish for oil. However, it looks like the opposite may have happened. Stocks of finished product ran down, forcing the US to buy a lot more oil. People don't go out and buy 1.3 million barrels of oil they don't need, especially not when crack spreads are this low and the economy this bad. IMO, most people pay way too much attention to the inventory numbers.

I think most traders yesterday were thinking like you, which is why oil went down for hours after the report was released. On the other hand, buyers came in late in the day, and the buying has continued.

One could probably come up with a seemingly logical explanation for this. However, something happens every day and oil prices go up or down every day. The press will pretend there is a correlation between seemingly unrelated events regardless of the situation. And then there is always what is happening or not happening in Georgia or the Gulf of Mexico. And then there's always the dollar.

But back to what might be a correlation between gasoline stocks and future oil prices. If stocks are down, they will need to be replenished which will drive future prices. This is assuming, of course, that there are not other factors which would overwhelm this particular factor.

It has been sort of an article of faith here at TOD that the rapid run-up in oil prices was the mainly the result of supply/demand fundamentals rather than the machinations of speculators. Prior to reading the above article, I was persuaded by the various arguments put forth and so too believed that speculators were not the problem.

However, now that it comes out that one company at one time held 11% of the total oil contract value on the NYMEX and that a small handful of financial entities have been holding a very large percentage of the total contracts, I am beginning to have my doubts. I know very little about the workings of the commodity futures markets, but surely it must count for something when speculators rather than actual users represent such a large fraction of the market. No?

Plus, I don't think it matters all that much how many of these speculator contracts were long and how many wer short, the point is that the very control of that much of the market cannot be insignificant and suggests that some dynamic other than the fundamental supply/demand of actual oil users might be at work here.

I think the argument that speculators can't affect the long-term price picture is a bit besides the point, because the short-term (several months) oil price run-up has had an extremely negative effect on the overall economy.

I don't want to re-open the arguments about speculation, other than to note that only a tiny percentage of the world's oil trades on the Nymex. IMO, there is a certain amount of Amero-centrism here.

suggests that some dynamic other than the fundamental supply/demand of actual oil users might be at work here

We know gross supply has been been pretty much flat since 2005, that "net" supply is down, and that demand has until recently been increasing exponentially (and is still increasing, even if the rate of increase is slowing). The fundamentals demand that oil prices be high. Why in the world would you need to dig around for another explanation for high oil prices?

No oil is traded on the NYMEX. Only paper (electronic) is traded on the NYMEX. Just because you have a futures contract it does not mean you can take delivery of oil. You just have to settle the difference on closing day. Cushing uses the front month futures price to set the spot price. Oil is then traded at this price. The question is how many of the traders are really interested in oil and are hedging. How many are just interested in making money and are speculating.

My understanding was that Cushing set the nominal price at the start of trading to Nymex price but afterwards, trading occurs based on prices set by buyer & seller.

Do you know where the trading of actual oil takes place? Is there a way of tracking such trading (the prices).
It would appear that the speculators/hedgers must keep an eye on such trading, otherwise the futures will get way out of whack from the spot price.

Krugman includes an chart of spot prices vs. futures prices in his article Speculative nonsense, once again (you may need to register to follow the link). Futures prices do track spot prices fairly well, however they are not identical.

But I don't think that fully explains why the price went up so incredibly fast and then came down to a lower level almost as fast. Did China and India suddenly go on an oil-buying binge and then went off it just as fast? It's now looking more and more that the underlying supply/demand fundamentals don't give the complete answer.

Prices actually tracked fluctuations in supply and demand pretty well. One of the problems people had during that period, is that oil prices are current, but information about supply is historical. So people were seeing prices rocket in April & May, but looking at January & February production numbers.

It's now looking more and more that the underlying supply/demand fundamentals don't give the complete answer.

What do you base that on? Your gut feeling that prices shouldn't move so much? I don't even trust my gut when it comes to stuff like that.

When you have a critical product like like, and you start to reach supply constraints, very small changes in the supply-demand balance will cause very large moves in price. IMO, the radical price swings are evidence of how tight supply was, not evidence that supply & demand don't give the complete answer.

Shargash is right--only a tiny percentage of the world's oil trades on NYMEX. For example, Saudi Arabia's oil does not trade on NYMEX. Oil does make big moves with small changes in demand, but 10% of a tiny percentage is not enough to impact the price much.

There are very powerful fundamental reasons why the price of oil zoomed up and then had a short term big drop. Probably the most important of the fundamental reasons was that China cut back its purchases sharply in July, after big increases in May and June. I don't have the data in front of me, but they bought something like 6% less in July than in June. That probably accounts for over $20 of the drop in price.

Speculators were probably responsible for extending the highs about $10-$12 and extending the lows about $10-$12.

Speculators never start a move--they always follow, because they are dependent on price moves as signals. At the end of a move up or down, they tend to push the move a little bit farther than it would have gone without them, and this spec-exacerbated part of the move is always short.

And speculators don't damage the economy with these exacerbations of moves, either. What they do is treat oil producers to higher selling prices, and commercial buyers and consumers to lower buying prices, than either would have gotten without speculators in the market.

And speculators don't damage the economy with these exacerbations of moves, either. What they do is treat oil producers to higher selling prices, and commercial buyers and consumers to lower buying prices, than either would have gotten without speculators in the market.

But isn't the purpose of hedging to reduce price volatility? It seems to me there is a conflict of interest between hedgers and speculators.

I think you are making the mistake of assuming that changes in supply should be reflected linearly in price. But this is not the case. Supply increasing (or decreasing) by 1,000,000 barrels per day is not going to have half the price move of supply increasing (or decreasing) by 2,000,000 barrels per day.

The relationship is simply not linear, which is part of what feeds volatility.

I had a broker friend of mine explaining this very phenomenon to me weeks ago in a private conversation.

This does not negate the existence of the fundamentals. The two superposes. But it makes it very difficult to tell apart their respective effects on the price of oil. It will delay rising awareness of peak oil in many circles for people will tend to stick to the less threating explanation of price movements and dismiss the other.

I don't think there was a lot of confidence that purely fundamentals could explain the very rapid up-tick; I recall repeated references to a long-term 30% growth rate which would place us close to $120/barrel at year's end. Note that 30% is no slouch- prices will double roughly every 2-3 years at that rate.

First, let me say this: I've been personally saying that there could be some 'premium' from various 'mechanisms' on top of the fundamental price. I just referenced a number I had read in various places, that this could have been in the order of $30/barrel (at the time of $140 oil). I didn't claim to know the exact size nor the exact reason for this premium, just speculated.

Now, what I'm really against are the claims like this:

1) Recent rapid rice rice from c.$68/barrel to c. $147/barrel was all/mostly due to speculation or manipulation

2) Speculation in the NYMEX/ICEF crude oil futures market are THE reason for the rise in spot prices of all crude oil varieties

I'm against these claims, until at least some proof is given to back up the claims.

So far, I've seen no proof. Just accusations, guilty by association type of circumstantial evidence and correlative thinking that would make my old stats professor fall into despair.

Yes, there is speculation in the futures market (well, duh!).

Yes, some players can hold big positions as referenced in the article above. Funnily enough no study has showed yet that these positions have been ALL long (instead of balanced between long/short).

Now, that's all the "proof" there has been. The rest is correlation. Sure, it's nice to speculate, but we can't know.

There's no proof of showing how futures dictate spot prices. No proof of manipulation or no proof or long only futures positions by few big players outweighing the short positions from all the rest.

No proof.

Yes, the claim could still be true. Some speculation could have had some effect.

However, the truth of the facts NOW is that price has gone down c. $35 dollars. That is 35/-(147-68)=44%.

Let's assume that was the 'premium' made by some 'mechanism' other than fundamentals (e.g. speculation, manipulation, dollar devaluation).

It's still not "most of the price" rise by any measure. If prices go to $70 on non-shrinking demand, then we can start talking about "mechanism X1, X2, X3, etc being the reasons for the price rise". But even then, we need proof for speculation causing the spot price rise.

However, let's not get ahead of ourselves.

We don't have this proof. For now it may be that the drop in oil price has stopped - even with the long futures position liquidated. Prices may even rise, we don't know for sure.

And the sad fact is that the article linked to above gives us no additional proof, just some circumstantial evidence about some big speculative players. That's all.

I really wish it was all down to speculation, because it would mean more regulation and a possibility of a smoother oil price in the near future.

However, I'm not going to let my wishes get the best of me. I want proof.

I hope the rest of you want proof as well.

P.S. I'm guessing there must be futures traders and oil industry insiders who know the real deal here. They could probably even give a dollar premium number, mechanism and the name of the guilty party if it existed. But for some reason they are not talking and this drives me mad :) Those who know, don't... etc

I'm known locally as the guy who writes letters to the editor debunking the claims from the state's heating oil dealers association that half the cost of oil is do to speculators. But I'll play devil's advocate here. There's a lack of proof for a very specific reason: The trading firms got the U.S. regulations relaxed roughly a decade ago so as to exempt them from prior requirements to report their oil trading activities. So if our standard for judging excessive speculative pressure on prices is one of evidence, and yet the accused speculators took special efforts with the government to hide the evidence - well, I'm reminded of the Hans Reiser trial, where they didn't find his wife's body, but they knew that he'd removed and hidden seats from his car, and the batteries from her and his cell phones, and had motive. He was convicted.

Of course, there are reasons for businesses to shun the light of day other than criminal intent. But shouldn't full disclosure be required of all market transactions, whatever the market, when they are of a scale that potentially affords opportunities for manipulation? We should assume that individual oil traders are as crooked as, say, it has turned out individuals in the various sectors of the mortgage business have been - which is to say, amoral when not immoral. Capitalism is a great mechanism for getting on-average honest behavior out of on-average crooked people - but only with proper controls to keep the light of day on things.

Failure to make full and complete reports of financial trades on this scale should be a felony. Lack of proof shouldn't prejudice us towards presuming innocence, when the very players have conspired to make sure that we'll lack any evidence at all. I side with the consensus that the speculators don't control the market; the market fundamentals are too strong. But Enron didn't hire staff in a vacuum - those are normal ethics in energy trading. Until proof of innocence is publicly available, we should presume guilt.

IMO what has been underemphasized in these speculation versus fundamentals discussions on TOD is the dynamics of market psychology (there are books written about this).

When a futures market becomes very bullish, such as oil surging toward $145 a barrel a couple of weeks ago, everybody starts to be caught in the psychology of the rising trend. The distinction between investors, commercials, and speculators does not capture the dynamic. You hear traders say things like "don't stand in front of a moving freight train". The shorts yield to the momentum of the rising price, which reinforces the rise. Day traders watch this price action closely for a break in the momentum, and when it occurs, the price drops back steeply. Fortunes have been made shorting the tops of these market blow offs.

Fossil fuels are in the midst of one of the greatest bull markets in history and it is not over yet. It would be extremely unusual, in fact almost impossible, for this rising trend not to be punctuated by euphoric tops followed by steep corrections. Look at how gold is behaving in its super bull market. I believe it's fruitless to try to figure out what moves the market day by day. Why did crude oil surge six dollars today? The momentum shifted, a butterfly flapped its wings, who knows?

For the sake of discussion, let us say that this $30/bbl 'speculator premium' is for real and that without it, the price of crude during this period would have been $30/bbl less.

Well, that doesn't sound like all that much on the face of it, but when you consider that the US uses 20 million+ bbl/day, then that speculator premium would represent over $600 million per day going SOMEWHERE.
I don't know about you, but I have a great deal of respect for that amount of dough.

As far as proof goes, I think what applies in this case is the old saying, 'Absence of evidence is not the same thing as evidence of absence.' The fact that only a portion of the worlds oil is traded in even a halfway transparent manner makes me more than just a little suspicious about what sort of things might be going on.

I have tried to keep an open mind about this whole speculator issue, and the more comments I hear the less certain I am as to what the truth really is.

I understand that it can cut both ways. I guess that's why it's called 'volatility.' While I would tend to agree that speculation does not add a permanent premium on top of the 'fundamentals' oil price, How about a temporary premium, such as in the sudden abnormally high oil prices that have been experienced over the last several months?

Sure-for a while there the price went literally straight up. What is interesting is that OPEC (as expected) is saying (implied) that the floor price will follow any record price level reached (whether speculation driven or not). When the price hit $147, suddenly $100 is cheap oil and a price level of $100 would indicate "oversupply" or "glut" according to OPEC spokespersons.

maybe,just maybe all this talk about supply or lack of it may just be the tipping point.geo politics will always add a premium to a barrel of oil,but lets look at the last few days,brazil output flat,canada output flat,mexico exports down,and imo saudis drawing down storage and some khursaniah production proping up exports.with all the supply problems and china set to import after olympics,and small uptick in u.s. consumption,if i was short oil i think i would cover.

Why did the speculators who control the market decide to bring the market down? Did they suddenly go short? Or did they just drop out of the market? Honestly, this all still remains a mystery to me. In the mean time, focusing on the more long term nature of the oil market would seem to be more productive. That market will clearly be driven by supply and demand.

This isn't a perfect analogy but look at the stock market. Wide fluctuations in the price of a stock can occur due to the willingness to bid up or down a stock. At some point, though, the underlying performance or predicted performance of the company will be the most important factor in the long term price range.

Anyway, what happened to all the talk in congress about reining in the speculators?

Speculators don't "decide to bring the market down." What happened was that China stopped buying, and commercials started selling. When the price drops to a certain level, or when the price moves in certain patterns, some speculators get a signal to close out long positions and other speculators get a signal to enter into short positions. Speculators react mainly to price moves caused by commercial traders. They assess risk and reward through statistical analysis of price moves, not through fundamentals.

They can't trade primarily on fundamentals because they have poor access to data on fundamentals. Commercials trade on fundamentals, and speculators trade based on what commercials are doing.

The stock market is very different from the futures markets. In the futures markets, there is no limit on the number of contracts that can be bought and sold, as long as you can find a party to take the opposite side of the trade. In the stock market, by contrast, people are bidding on a limited number of shares.

Congress has dropped all talk about reining in speculators, because speculators have been net short, and have been treating consumers to "artifically low" oil and gasoline prices for a short time.

Finally, the storage argument fails to recognise different types of inventory. Thus, record-high speculative prices have likely caused bunker traders to release inventory, but those releases may have been purchased by speculators who are now active lessees of commercial storage capacity.

The implication is that speculators can drive up prices and increase their inventory holdings even as total commercial inventories remain little changed.

They then take delivery on their premises so that overall refined inventories rise, but that increase is not part of reported commercial inventories.

Proving that speculation is responsible for higher prices is always difficult, because it tends to occur against a background of strong fundamentals. However, there is considerable evidence that strongly indicates rampant speculation in today's oil markets.

I was under the impression storage in refineries was counted in inventory. This was from the Canberra Times, so perhaps reflects an Australian viewpoint. But nothing in the article made that clear.

The "active lessees" part would refer to GS and the like buying up tanks in Cushing, but that's still a minor part of US stocks overall, so I'd still consider that a weak argument.

Would like to hear more opinion about the CFTC's role in this - how they neglected to point out that just a few players are controlling so much of the pot. That is odd.

The problem with the inventory argument is the scale of oil production. The world produces 75,000,000 barrels a day. Suppose you store a million barrels somewhere, which is a lot. That is about 1.3% of supply. It is enough to move markets.

However, the next day another 75 million barrels are pumped. The next day another. And then another. The effect of your sequestration of 1 million barrels will diminish over time like ripples in a pond.

To push prices up and keep them up would require that you store 1 million barrels a day, every day, indefinately, paying storage costs all the while. And the minute you tried to release any of that oil, you'd drive prices back down again.

Now maybe you don't need 1 million barrels a day, but you would absolutely need to store on the order of a hundred thousand barrels a day (minimum), every day. A smaller amount is in the background noise of oil production. Oil has been going up since 1998. The idea that the rise is caused by someone storing oil without being detected is preposterous.

We are also dealing with some abuse of the English language. In reading such arguments, the word "speculator" morphs to mean just about anything the writer wants it to mean in a given sentence. One minute they're talking about index funds dumping money into oil futures. The next minute they're talking about shadowy international entities sequestering large amounts of oil. When pushed into a corner, they usually shift to OPEC "speculating" by not pumping as much. Because the arguments morph all over the place, answering them is like playing whack-a-mole.

The vast majority of oil price comes from fundamentals. If an entity somewhere can affect the fundamentals of oil (the way the Hunt Brothers affected the fundamentals of silver), then that entity could affect prices. But it is fallacious logic to say such entities are "speculators" and jump from them to the idea that "speculators" on Nymex can affect the price of oil without affecting fundamentals.

Thanks - or as Bob S would say, THX - for responding, Sharg. I'm mostly convinced by the fundamentals argument as well. 260 billion ain't chump change of course but against the background 5.5 trillion (or whatever the figure is) paid for physical trades it's a wave in the ocean, which is the monetary equivalent of your hoarding trader.

In the 70s shortages panic was said to play a large role in driving up prices as well. Why no Congressional hearing against nerve wracked traders, hmm?

This is one of those staggeringly intricate subjects that I've always thought would benefit tremendously from being presented with interactive graphics. Might even convince a politician if done well...

I think the argument that speculators can't affect the long-term price picture is a bit besides the point, because the short-term (several months) oil price run-up has had an extremely negative effect on the overall economy.

The short term price run up has also had an extremely negative effect on the speculators who shorted the commodity (and also, very importantly, on the options speculators who provided hedges to companies like the airlines).

To put it succintly, you make money on the NYMEX by letting the market push you. Pushing the market costs you and will eventually bankrupt you.

Jessica Walter did not go to Harvard University to study cupcakes, but they are what she does since losing her job as a vice president for credit strategy at Bear Stearns.

"I want to teach kids to cook," said Walter, 27, who founded Cupcake Kids in New York to provide birthday parties and cooking classes for children. "The goal is to have this be my full-time job and make enough to live."

Wall Street professionals are trying new careers, and getting smaller salaries, after the elimination of more than 76,000 financial-sector jobs in the Americas stemming from the global credit crunch that started a year ago, according to data compiled by Bloomberg.

Love it, Leanan! As an almost completely retired college professor (of philosophy and the history of science), I really appreciate your comments about the value of expensive college educations these days. While the critical thinking skills and the conceptual and emotional flexibility that a good education can introduce one to are vitally important, these can of course be picked up in many ways. Some of the most useful skills I have--e.g., how to cut down a tree without dropping it on my head--I acquired homesteading here in Vermont, with the help of many oldtimers who never went to college. Of course, the ability to think critically and flexibly remains worth having regardless of the price we must pay for it and regardless of where we pick it up.

For the vast majority of people, they would be better served going to a community college for their first two years. For a great many people, two years at a community college is all they can really hack (lots of people who start 4 year colleges never finish), and in many cases a two year degree in some sort of trade or technical program is all they really need. For those that do have the intellect and discipline to make it through all four years, community colleges have done a good job of coordinating with major universities in their states to assure that their credits will transfer.

Tuition at community colleges is MUCH cheaper than what you will find even at state universities. Furthermore, course scheduling at community colleges is often done in a way that makes it possible for one to also hold down a part-time or even full-time job and work your way through school, thus avoiding racking up big student loans. The job opportunities in big college towns are often limited to serving tables, washing dishes, or delivering pizza, but community colleges tend to be located in other places which often have more diverse and better paying job opportunities. Finally, the really big advantage is that for most students, they will be able to stay home for the first two years, saving a bundle on room and board. I realize that the freedom of being away from Mom & Dad is one of the big attractions of traditional college life for many people, but that has become a luxury that few can really afford any more.

I realize that those with elite IQs wanting to pursue a career in the sciences or engineering probably do need to get into a place like MIT or Carnegie Mellon, and for them it is probably worth the extra expense. We are talking about very few people, here.

I attended a big name four year school and some of the sharpest people I knew had done their first two years at a smaller school and transferred in to get the name degree.

The other huge advantage of attending a smaller school the first two years is that the basics are generally not set up as "weeder" classes. This is major for people who are suffering a little culture shock but are capable of hacking the work with a little focused assistance from the professor now and then.

In 2009, cupcake speculation runs rampant. By July, the commodities markets trade 24 varieties of cupcakes according to flavor, frosting, and embellishments. In August, futures for Dec. 20th expiry reach a peak price of $11,117.60/lot (1000 cupcakes). Accusations fly that financial institutions, trying to recover from massive losses due to mortgage-related SIVs, are hording voluminous quantities of cupcakes, storing them in renovated missile silos in the Midwest. However, a surprise comeback of the Atkins diet brings the cupcake market to its knees, and nearly $1T is lost in the first two weeks of November following a Halloween season spike.

One advantage of reducing your cost of living is that you are better equipped to compete for declining jobs. I have previously described how I demanded a 50% pay cut around 1990 (provided that I received an equity interest in deals that I sold). Fortunately, my wife had a good job, so our total pay cut was more like 25% (definition of a successful geologist: one who has a spouse with a good job). In any case, I anticipated layoffs, and I was the most highly paid employee at the time. I turned myself into the lowest paid on the staff, and as I anticipated, there were layoffs.

Why does the NYMEX oil futures price always seem to swing wildly in the "early afternoon" timeframe? Has anyone taken the first derivative of the data, and plotted each day on the same graph? This would show whether there's any pattern to the timing of these price swings. It would also support the notion that a few players are dominating the daily trades.

A lot of experienced traders like to wait until the end of the trading day before making a trading decision, because you can tell a lot by the pattern of buying and selling throughout the day. So, there tends to be a lot of volume in the last half hour before the close, and if there is a strong reason for the market to move one way or the other, you can get a big move then.

The market can also make a fairly big move right after the close, due to low volume. Speculators often buy and sell then based on the day's trading. They tend to drive the day's move further at this point.

The headline story above "Airlines emerge from profit-killing oil slick" made me laugh. Aside from the fact that the drop in oil prices is almost certainly a short-term phenomenon, the continuing deterioration in service is making flying less and less attractive.

I've recently had the displeasure of flying again on a US airline. Although I haven't yet experienced the 7+ hour delays that some have reported, I do indeed notice that things are going downhill.

A new boneheaded idea seems to be the "self check-in." At first, it was optional, but now seems to be mandatory, at least with US airlines. This is supposed to be a labor-saving technology - hah! The previous time I flew, I saw about 200 people trying to check-in at the normal check-in window, and maybe 10 who checked-in luggage at the "self-check-in window" (which still requires a full-time staff person to tag their luggage and check their documents).

This time, there was only one window, with self-check-in required. The airlines are very determined to make this mandatory, regardless of what the public thinks. Since many people had not previously checked-in at home (using a computer, the Internet, and an attached printer), they had to fumble with a machine at the check-in desk which many couldn't understand. So a full-time staff person had to come out and help them, and meanwhile the line backed-up considerably. Check-in actually took much longer than usual thanks to this labor-saving device.

Another good reason for me to avoid US airlines if at all possible. Airlines no longer answer their telephones when you call for reservations - the recorded message suggests that you use the Internet. If you persist, you spend 20 minutes talking to a computer that walks you in circles before hanging up on you.

I'm fairly Internet savvy, but many others aren't. And buying through the Internet cuts out a lot of options, like flying into one airport and flying out from another (something I do often). Don't even think about trying to change your travel dates once you've already booked a ticket - the penalties are outrageous.

When going abroad, I'll gladly pay more to fly a foreign airline which still maintains some semblance of customer service.

I'm thankful that I'm now in a situation where I no longer HAVE to fly anywhere. As far as I've concerned, I had my last airline flight a couple of years ago, and very much hope that I never have to subject myself to the ordeal ever again. I can not think of anyplace I might want to go to that is worth the trouble.

I'd suggest a modification to WT's "Get thee to the non-discretionary side of the economy." I'd add: "Get thee also to the non-flying side of the economy."

Yes, and the self-check attendants who take your bags are totally overwhelmed & overworked. When I flew earlier this month, the guy who took my bag forgot to give me a boarding pass, and I misunderstood what he mumbled...thought he said my boarding pass would be available at the gate because I had requested an upgrade. After going through a LONG line for security (which wrapped around and around multiple gates) I got to the head of the line and was turned away because I didn't have my boarding pass. They sent me back to the ticket counter and it was only because I jumped the line to get my boarding pass and then was escorted back through the security (without standing in line again) that I even made my flight. And I HAD checked in, in advance, via the Internet.

You really have to have your wits about you when flying, and make sure the personnel all do their jobs properly these days.

Another good reason for me to avoid US airlines if at all possible. Airlines no longer answer their telephones when you call for reservations - the recorded message suggests that you use the Internet. If you persist, you spend 20 minutes talking to a computer that walks you in circles before hanging up on you.

A few years ago when BA first introduced a voice recognition system, I attempted to use it to switch to an earlier (UK internal) flight. I hung up when it said: "Confirm destination change from Birmingham England to Birmingham Alabama via Kingston Jamaica.

"WASHINGTON — Energy Secretary Samuel Bodman checked himself into Massachusetts General Hospital on Tuesday after experiencing an elevated heart rate, the Energy Department said today.
Bodman's heart rate has since stabilized, and he was resting comfortably, a spokeswoman said."

I can relate. Hope he is OK as he has been talking sense on PO now and then.

Does anyone know if any engineers have tried adapting the control electronics from a Segway scooter to a two-wheel railbike? Would it require a concave track for self-centering? Sorry, I am not an engineer...:(

...but I was reading about the speed records for human powered railbikes and aerodynamics are critical for topspeed and/or efficiency. The outrigger adds weight, friction loads, and aero-drag: if a railbike could use the Segway electronics for balancing, then it could use just one rail-->drastically lowering the SpiderWebRiding infrastructure cost, or doubling the capacity if applied to conventional double-track railbed. The railbike might then be much cheaper & lighter, but faster and/or have an extended range.

It is hard to justify buying the present Segway because a regular bicycle or cheap batt-scooter can meet the same basic task, and it is certainly not aerodynamic. But the postPeak market might be huge for an electronically balanced railbike using the Segway setup to cruise along 35-50 MPH [battery assisted cruise] for commuting, 15-25 mph [pedal assisted cruise for regular humans, not pro racers].

I think the most likely application, as posted before, is for this SpiderWebRiding to function as the 'ribcage' that extends out from Alan Drake's standard rail gauge 'RR-spine & TOD-limbs'. How about a single-track, self-balancing, aero-sleek cargo railbike moving the rider/pedaler plus an additional 200 lbs of vital goods 12-20 mph, maybe an easy 60-100 mile dispersive rural radius from the RR & TOD depots?

Wouldn't this be much better than the Nuahtl Tlameme backpacking scheme?

Is this just another one of my 'Wild & Crazy' ideas, or does this have any future applicable merit? Thxs for any pro & con replies.

Bob;
The trick with balancing two, inline wheels on a bike is all about having lateral adjustability, just as the two co-axial wheels of a Segue rely on Forward/Back adjustability (speed control) to maintain balance. The connection to a Rail would seem to prevent this approach. I keep looking at changing the outrigger and rail design instead.

Perhaps as with some monorail setups ,and to maintain your pipe aspect of the system, it could be predicated on two adjacent or top/bottom pipes, running together at a set distance, allowing your 'Non-colinear' wheel outriggers to be closer together, requiring least additional weight and wind-resistance. OR, the single pipe could have a flange or pair of flanges for your Railbike to latch onto for Balance-free riding. Since the loading on such a system might only ever be a couple thousand pounds, I still would incline this system design to rails like you'd find on a 'Fun Park Train', however, and not tie up the two systems together, where the maintenance of either could interfere with both. They could still share common support infrastructure, along with electrical transmission perhaps and a way to get a little Electrical help in your rail-running.. (But I digress, and recomplicate a nice, simple idea, don't I? Sorry.)

There is an old 24" 'Narrow Gauge' rail standard in Maine that you can still ride on and look at down at the Maine Narrow Gauge Railroad Museum in Portland. I don't know how helpful the size reduction is, since the track leveling and rolling stock stability is that much more critical.. but it's damn cute! http://www.mngrr.org/indexa.php

RESTORATION OF STEAM ENGINE#7 Yes it’s true!! MNGRR is pleased to announce that 2008 is the year we will begin to bring steam engine #7 back to life! It has been a long time coming, but the board has approved the project and it is to begin immediately.

I've been building various carts from kids' bike wheels, etc.. and now I can't help but try to pronounce the Name 'Totoniela' over and over as I push these creations around.. and imagine what the name means.. (Looking it up at this point would be cheating, or just much less entertaining)

Thxs for responding with good points and ideas! It may be trying to reach for a bridge too far to hope for a self-balancing two-wheeler when four wheels on parallel tracks is a long proven concept. But maybe some genius can figure out how to crack this nut...

The big problem with a high speed, enclosed Human Powered Vehicle [HPV] on regular asphalt is side gusts precipitating a speed wobble until the craft loses control. Sensitive electronics with a high-sampling rate could quickly dampen such effects and lean the machine in the direction of the incoming gust to retain control. A concave railtrack [4-6 inches wide?] could serve as the 'keel' to help keep a uni-track railbike immune to these sudden gusts or a stiff, consistent side breeze by allowing the bike to lean at a non-vertical angle against this force. My feeble two cents.

If you want to balance an inline-wheel vehicle like a bike using only the gyroscopic force of the wheels, you absolutely need freedom of lateral movement, otherwise it's impossible, even with sophisticated electronics.

You can get around this, though, by using an independently movable on-board flywheel. Toy RC motorcycles use this principle, and they can stay upright even when stationary. If you have a flywheel you also have the potential for regenerative braking. Systems like this start to get mechanically complex though..

I like the idea! In the spirit of brainstorming: another option you have is to try to use aerodynamic forces for stabilization (think: adjustable tailfin). Unfortunately, this would require that the vehicle get up to speed before it is effective. In the small rocket world, launch rails are used to stabilize rockets until they reach a certain minimum speed. As they leave the end of the rail, they are going fast enough that the tail fins take over to keep the vehicle stable.

Maybe the unit could be suspended from a single overhead rail with wheels running on top of the rail. Would make laying the track a lot easier, you could put in a simple cable car style section to climb hills.

Failing that two - two wheeled rail bikes running side by side with load carry apparatus in the middle.

There is always the tri-maran concept having angled 'wings' which would both be off the ground whilst travelling at speed but the vehicle can be tilted so either side can act as support if needed.

I think the following would work as a conversion of a regular tandem bike to a rail bike (please excuse the schematic quality :-/ )

The front handlebars are removed and the front wheel is left to freewheel. The center seat is removed, and the structural tube marked A needs to be replaced with a steering tube like in the front (this could be welded alongside the structural tube). The flywheel is attached to a fork at the bottom of this new steering tube and can be turned by the center handlebars. Some structural tubes at the bottom need to be removed also, but this shouldn't be a problem with only one rider.

The flywheel is driven by an electric motor and rechargeable batteries (these could be much smaller than for a main drive system), and an alternator for recharging is attached to one of the wheels. The brakes would control current draw from the alternator, providing regenerative braking.

Turning the handlebars and rotating the flywheel would create lateral force, so you would turn them just like on a normal bike to stay upright, but it wouldn't affect steering at all - the bike would steer itself along the track. If the flywheel was good quality (maybe vacuum sealed even), it wouldn't take much energy to keep it going; I think the regenerative braking would be enough.

If you are interested in 24 inch guage narrow guage check out the FFestiniog and Welsh Highland Railway at http://www.festrail.co.uk/

The Welsh Highland Railway is being rebuilt and there will be a 40 mile network by next Easter. They will be running 2-6-2 + 2-6-2 Beyer Garrett engines which weigh in excess of 62 Tonnes. they have two power bogies, carry 1,500 gallons of water, 4 tonnes of coal and can pull 12 carriages up gradients of 1 in 40.

Plus they still have the skills to maintain and build new engines at Boston Lodge in Porthmadog, and they need no electronics.

How does this work as a way to move large numbers of people which can already be done on a bicycle trail or city streets, for that matter? How does one pass? Isn't the system constrained by the slowest rider?

From the "Oh crap another thing to have nightmares about". Why is it that all prophecies, etc and resource depletions have to interconnect right NOW?!?! Talk about peak everything, some time in 2012...you'll have no gas to go anywhere and even the compass will be wrong.

A large sunspot set off a major radiation storm in 2006 that temporarily blinded some sun-watching satellites. Astronauts on the International Space Station retreated to a protected area as a precaution to avoid unnecessary radiation exposure.

The Earth's overall magnetic field has weakened at least 10 percent over the past 150 years, which could also point to an upcoming field reversal.

Mandea and Olsen hope to continue refining their model with updated observations, and perhaps to eventually help predict future changes in the Earth's magnetic field.

A fake fortuneteller can be tolerated. But an authentic soothsayer should be shot on sight. Cassandra did not get half the kicking around she deserved. Robert Heinlein

That's interesting - one of my old professors of electrical engineering has a theory about how the Earth's magnetic field is generated - see the link - something to do with self-exciting dynamos and the Hall effect. He reckoned the field would reverse if the Earth got an enormous whack of an asteroid! Let's hope that's not about to happen.

Thanks Rockman, I'll take your word for it. Looking at the paper again, he mentions other possibilities too, but it's still a bit of a mystery. Amazing that we know so little about the dynamics of the earth's core itself. A field reversal would be really be the icing on the global warming-peak oil-credit crunch cake!

As I recall, the magnetic reversals were "fingerprinted" in oceanic crust (basalt) - as the rock cooled the existing magnetic field at the time the rock was formed upon emanating from the mid-ocean ridge was locked into magnetic minerals in the rock. So on opposite sides of the ridge there would be more or less symmetrical (about the ridge) bands of rock that exhibited the same magnetic field (the field at the time in geologic history when that particular rock was formed). I think this was one of the key pieces of evidence leading to the theory of plate tectonics, continental drift, and mid-ocean ridges as the source of new oceanic crust (and it's subsequent movement and, in some locations, subduction beneath continental crust).

My theory is that Bill Clinton is analogous to Roman Emperor Tiberius. Tiberius reportedly wanted Caligula to succeed him because after a few years of Caligula's rule, Roman citizens would look back on Tiberius' reign as the "Good old days."

“Phosphate fertilizers have gone from $4.70 per unit to $17.15 this year,” Strain said, in the release. "I’d like to see what can be done to help push those costs down.”

Strain said the costs of raw materials used in fertilizer production have all risen, but sulfur prices have shot up dramatically.

“Sulfur cost $28.70 per ton in 2003 and $40 per ton in 2007,” Strain said. “In 2008, open market spot prices for sulfur can be as much as $500 per ton.
----------------------------
Have you hugged your bag of NPK today?

It's a problem with no solution. Unsustainable resources can only last for so long... the party's not over, but last call is close.

Even with farms, I now hear that people (speculators) - with little or no farming experience - are buying up farmland figuring that:
1) farm/real estate prices (outside the Midwest) can't drop any further (this one sounds fishy to me, but I repeat anyway);
and/or
2)there's money to be made from biofuels.
I guess they didn't do the homework to know that operating costs are going way up.

I called a few jewelers in the Chicago area. No one has any gold bullion on sale. No one. What the hell is going on? Where did all the gold disappear? Only a couple of weeks ago, you could buy as much as you wanted.

People stopped buying gold because they needed the money for NPK fertilizer, unleaded gasoline, and corn raised chickens. They started hoarding rice instead of gold, because you can eat rice, but gold mining leaves a big empty pit in the ground and more barrels of oil consumed to dig the yellow glitter, that is not much different from lowly brass that retailed more than a hundred times cheaper. Hard to spot fake gold jewelry.

It's technically an Op-Ed piece, but I agree that it is pretty stupid. The underlying premise is that the worst case is a temporary disruption in oil exports--and that we can in effect have an infinite rate of increase in our consumption of a finite fossil fuel resource base. No worries. Party on Dude.

The authors' most salient point was that supply disruptions have never amounted to more than a few percent of total world production and therefore, the SPR would likely last the US longer than the oft-quoted figure of 35 days. Fair enough.

It is clear, however, that concepts such as PO or ELM, are not on the authors' radar. Their imaginations have let them down -- a classic example of failing to "think outside the box."

"the SPR would likely last the US longer than the oft-quoted figure of 35 days. Fair enough."

Its not that simple. Look at Wikipedia entry on SPR. One crucial detail of SPR is the rate at which the crude oil can be pumped out of it. Turns out this is at most 6mb/day. Our current use is about 20mb/day of which about 30% (6mb/day) is from our wells, so a cut off of imports drops our available oil to about 12mb/day (6mb/day from SPR plus 6mb/day from our own production) I think it is fair to say that a sudden drop from 20mb/day to 12mb/day would be a serious shock to the economy. Then after about 175days, the SPR is empty and available oil drops by half to just 6mb/day from our wells.

When McCain recently did a photo op on an oil rig, he boasted that this rig pumps 10,000 barrels a day! According to the free calculator that came with my free cell phone, That's 36 seconds of supply.

The media can not, will not, use their free calculators to make sense of a number. 10,000 is "a lot." We all know that a new car costs 20,000, and the checking account only has 1,000 on a good day. 10,000 is less than a new car, but it's more cash than we've ever seen at one time. So that's a lot.

On the USGS' own website it says that there are 18 billion barrels of off-limits offshore oil. That's three years of supply. Not much if you ask me. Nowhere, nowhere in the media will anyone ever make that connection. I'm convinced it's taboo.

*I was wrong last month to say "one month" and "one lifetime." but a 2x error ain't so bad, compared to the error of considering "a billion barrels" to mean "eternal supply."

I discovered an error in my earlier work. The maximum drawdown rate is 4.4mb/d, NOT 6mb/d.
Combine this correction with BlueTwilight's more precise breakdown of petroleum consumption to get slightly different numbers as to the size of the shock to the economy.

If one assumes that finished product deliveries are NOT interrupted when crude deliveries are interrupted, the supply drops to 14.4mb/d. But its not sensible to assume business as usual for finished product deliveries when crude deliveries have stopped.

If one assumes that both crude and finished are interrupted, the supply drops to 9.4mb/d.

I agree, it's a pointless article, it's clear that the SPR can act as a buffer against temporary supply fluctuations but it's clearly useless if we passed peak supply and the total amount of supply available on the market is diminishing over the years.

While the SPR would indeed act as an effective shock absorber during periods of supply disruption, after it has been seriously drawn down it will be very difficult and financially painful to replenish the SPR in an environment of chronic oil shortages.

Thus, if the oil supply situation get really bad, using the SPR in a major way might wind up being a one-time deal.

I think this problem is very much analogous to a family drawing down on its emergency food stash during a famine. Chances are that if chronic food shortages persist, then that emergency food stash is never going to get fully replenished simply because there won't be any surplus to replenish it with.

A high level Kazakh official told Turkish business daily Referans that question marks now hang over the security of the BTC pipeline. "We could reconsider our decisions on sending Kazak oil to the world market. Changing the (export) route is in our agenda now," the official was quoted as saying by Referans.

Are the neocons so arrogant or stupid to think they could compete with the Russians in their backyard?

Canatrall production is down 36%!! and exports are down by 22%!!, this is much sharper then expected:

Pemex July Oil Output Falls 12% as Cantarell Declines (Update2)

By Thomas Black

Aug. 21 (Bloomberg) -- Petroleos Mexicanos, the third- largest supplier of oil to the U.S., said production fell 12 percent in July from a year earlier as output declined at Cantarell, the world's largest third-largest offshore oil field.

July's daily output dropped to 2.782 million barrels from 3.166 million barrels in the same month last year, the state- owned oil company, known as Pemex, said today on its Web site. In June, Pemex produced 2.839 million barrels.

Daily production at Cantarell, which first began pumping oil in 1979, plummeted 36 percent in July to 973,668 barrels from 1.526 million, according to an Energy Ministry Web site.

Faster-than-expected declines at Cantarell prompted Pemex to lower its oil production target in July for the second time in as many months. The Mexico City-based company reduced its 2008 daily production target to 2.8 million barrels from 2.9 million.

For the first seven months of the year, Pemex produced 2.845 million barrels a day, 10 percent less than a year earlier. Cantarell's daily production was 1.127 million barrels, 472,000 barrels lower than the same period last year, Pemex said.

Crude exports in July fell 22 percent to 1.377 million barrels a day from a year earlier. Daily exports were 1.415 million barrels in June.

It's mainly just simple depletion. If memory serves, based on the early 2005 WSJ article, Cantarell had an average of about 800' of oil column between the Oil/Water contact (or contacts, I'm not sure if different fault blocks have different contacts) and the overlying gas cap, and the oil column was thinning at about 300' per year.

This is why I constantly harp about the fact that if Ghawar is in decline, which I believe that it is, every oil field in the world which has ever produced one mbpd or more of crude oil is presently in decline. Peak Oil is the story of the rise and fall of the large oil fields.

A giant oil field contains at least 500 million barrels of recoverable oil. Only 507, or 1 % of the total number of fields, are giants. Their contribution is striking: over 60 % of the 2005 production and about 65 % of the global ultimate recoverable reserve (URR).

This means that there are 49,500 NOT giant oil fields out there producing 40% of all the oil. This means that since the average field size discovered a few years ago was something like 30 million barrels (not a giant), that it would take 75,000 such smaller fields to replace the 507 giants that Robelius studied. Since these smaller fields have an average lifetime of approximately 9 years (as opposed to decades like the giants), you have to find 75,000/9 = 8,333 fields per year just to stay even. That means you have to find 22 such fields per day or drill 110 exploratory wells per day. Given that fewer than 1 in 5 exploratory wells drilled actually finds oil, you need to drill over 40,000 exploratory wells per year. If you are drilling offshore, each exploratory well can run over $60,000,000 just to drill a dry hole. There exists neither the manpower nor the equipment to drill that many holes in the entire world.

People who think we can "drill, drill, drill" our way out of this mess are innumerate monkeys who completely fail at basic addition and subtraction. Jeffrey is absolutely correct when he says the rise and fall of the entire oil age is completely about the rise and fall of the giant oil fields.

If technological civilization is going to have a future, it is not going to be a petroleum powered future. Logically, rationally, that future is electric, so that no matter what the source of the electricity (coal, wind, solar, nuclear fission, nuclear fusion), the power system of such a civilization is insulated from the source.

The fourth level is that Mexico is a lot poorer country without oil export revenue and it is the #1 supplier of illegal immigrants to the USA, along with being more fully integrated into the USA with the SPPA-should be interesting.

Xeroid, just to be exact production declined by 12% July YoY, the 10% decline was the average since the start of the year, so the exact measure of ELM for Mexico is 12% production decline in July leading to 22% export decline in July.

Back in April 2006, Pemex was expecting Cantarell to decline by 10% a year, thus reaching 600k bpd by 2013 (http://online.wsj.com/article/SB117570687954959825.html), however by the end of 2007 the decline rate was 25% and today the decline rate has reached 36%, accordingly Cantarell production will hit the 600k bpd range by July 2010, 3 years ahead of the company official schedule, should this rate of decline holds.

Back in February 2006, a group of experts predicted that Canatrell rate of decline is much larger then the company is welling to admit, and they proposed 5 possible future scenarios, the worst being Cantarell hitting 875k bpd by the end of 2007, it turns out they were off by a year, from the February 2006 WSJ article:

The study, carried out last year by Pemex experts, offers a rare
glimpse inside the traditionally secretive oil company. It outlines
five scenarios for a decline at Cantarell, four of which are more
pessimistic than the company's current public forecasts.

The worst two scenarios suggest a drastic decline in output to
875,000 barrels a day by the end of 2007 and to just 520,000 a day by
the end of 2008. If such projections turn out to be correct, Mexico's
overall oil exports would decline by about one million barrels a day
-- equal to about 63% of its daily crude exports to the U.S. -- from
its current 1.8 million.

The story of Cantarell, should serve as a dire warning to the believers in Ghawar, I believe the IEA report coming out in November will paint a much grimmer picture about the state of the world largest oil fields, then many expect.

Finally, click on the "Fx" circle on the upper left corner to get the time frame updated to july 2008; otherwise it will only show next to last month.
You might get the impression that the imports data is not there... roll down the window. :-)

Then you can get a clearer picture of what's going on with México's REAL exports.
I have a graph of net exports at www.economanias.blogspot.com according to the data and extrapolating a bit México will cease to be a net crude oil exporter by march 2010

You might want to crossreference the data with EIA data on export-import from México.

As the age of cheap oil comes to a close, it's springtime for gloomy futurists. Visions of a brutish world marked by violent squabbles over dwindling reserves, of junkyards littered with abandoned cars, of suburban slums overrun by weeds, of the collapse of industrial agriculture--none of this sounds as outlandish as it once did. Still, most of these horror stories are likely overstated: Energy experts tend to agree that, with a little ingenuity and a generous helping of political will, we could transition away from fossil fuels without being forced to give up our modern lifestyles.

But there's one big exception--an area where a post-carbon world really could mean a radical shift in the way we live. That's the world of commercial flight.

Well, anyone up for drafting a collective Oildrum.com letter to the editor?

I will start but but need help because my sentences are usually too long and I don't have a good publication record.

Well, the New York Times has done it. The "All the Oil We Need" editorial on August 20th set a new low for critical analysis of our nation's energy crisis. To assert that strategic reserves will save the day from declining production in Mexico, Saudi Arabia, the North Sea, Russia, etc., etc. is absurd and the naiveté is laughable.

There have been a couple of DB posts in the last few days about geothermal energy.

It is amazing just how little funding geothermal research has received.

Now Google.org—the charitable wing of the search engine giant—has chipped in nearly $11 million for this renewable resource: so-called geothermal power, or tapping the Earth's heat to make electricity.

That makes Google.org the largest funder of enhanced geothermal research in the country, outspending the U.S. government.

Geothermal isnt just the taking of steam that "dribbles" to the surface.Geothermal is multi
faceted in its approach and usages. Utilising heat
exchangers subsurface and also using closed loops and
isolation heat exchange circuts makes geothermal quite
viable and very competitive.Total electric world
production was 35098 GWh/a in 1997 and has grown approx 9% per year since then for countries where
records were available.http://www.geothermie.de/europaundweltweit/ge-eawp.htm
People have used geothermal since they began walking
erect.Grain pits and root cellars are evidenced in
most archaeological sites of ancient civilizations.
Taking advantage of geothermal properties in the earth
is economical and prudent and is probably the most
overlooked of all the "low hanging" fruit.
Just several meters "or yards" below the surface of
most of the planet the temp remains a constant 55
degrees F.
Adding 20 degrees to 55 isnt that difficult compared
too adding 50 degrees to say 30 degrees of ambient
air temp as conventional heating does.
Also no need to even use energy to run compressed gas
for AC and try and cool 90 degree ambient air when
you have 55 degree from a heat exchanger from terra
firma 24/7/365.Humidity would be your only concern with the geothermal and would be taken care of the same as with conventional AC...just use a pan to catch
the moisture caused by thermal exchange and conduct
outside of building via conduit drain tube.
Or as a previous poster showed earlier up...we could
use huge space balloons and mirrors..sarcasim off!
I think they phrased it
Geothermal is a success story thats under utilised
and for all the obvious reasons.
Sorry if this has been posted before ad nauseum...
Iam new here

Both ways of looking at it are equally valid depending on you point of reference. You could hold the dollar steady and watch the price of oil rise or fall with the relative scarcity/availability of oil. or you could assume stable oil and watch the price of dollar rise and fall with the relative scarcity/ availability of the dollar.

Well so ends another "DRUMBEAT" August 21-2008
Sure some lambs left the flock when oil dropped from
near $150.00 to the extreem depths of $113.00.
Now the kids are back and see the price going back up
and worry if any will notice they had a crisis
of faith.
Hey, it only took about a week right? I mean it wasnt
like you cant say..."I went on vacation" or some other
excuse huh?
Besides...this P.O thing aint a 10 minute oil change
at the local Jiffy Lube.I dont expect Wallstreet types
to toss themselves from windows soon,(the windows dont
open like they did in 1929)I do expect a decades long
slow Chinese water torture market decline.
I expect more wars and more rumors of war.I expect
the goverments will have Katrina like lightning responses and effectiveness.I expect people too survive like they have always done.
I expect the surviving people will worry and fret as
they always do.Infants ability to smile and then furrow a brow in an instant always has amazed me.

You actually may have hit upon a factor: vacation. We all know the EU traders (and everyone else there) go on long vacations in Aug. Probably a lot of US traders take off this month too. Wouldn't that be a kick in the butt if that did play a big factor in this short term drop. The traders get back, all rested and tanned, and hit the phones with a vengence trying to recover some of the bucks they just blew in the Virgin Islands. A trade has to sell something. If much of the market thinks it's near bottom then you have to start selling the other direction.

ScienceDaily (Aug. 21, 2008) — Triticum mosaic virus poses a new threat to Texas wheat, according to Texas AgriLife Research scientists in Amarillo...

...Price worked to find out how widespread the triticum virus was and found it throughout the entire west side of the Texas Panhandle.

"I really need to survey everywhere I can this year," he said.
-----------------------------

More info on I-NPK demand inelasticity if we want to keep eating?

http://www.cattlenetwork.com/Content.asp?ContentID=246623
------------------------
Phosphorus (P) fertilizer prices are high, no question, but wheat producers should not overreact to the lofty price tags by cutting back on phosphate fertilizer if it´s needed for the wheat crop, said Kansas State University agronomist Barney Gordon.

Phosphorus is generally the second-most limiting nutrient in wheat production behind nitrogen, but in some areas of the Great Plains, phosphorous is even more limiting than nitrogen.

"Early-season phosphorous deficiency can limit wheat yield potential. The first five to six weeks after emergence is the critical period. Wheat absorbs about 18 percent of its total seasonal phosphorus uptake in just the first two weeks of growth," Gordon said.

Gordon said the biggest response to phosphorous will come from placing the fertilizer with the seed -- either as a dry product, such as 11-52-0, or a liquid, such as 10-34-0.
--------------------------------
As posted before: IMO, the JIT US import reliance on I-NPK is a strategic oversight mistake on those responsible for our national security. The farmers rioting, protesting, and committing suicide in India, Pakistan, Bangladesh, etc, understand the criticality of the need for I-NPK supplies to be absolutely, positively available for the optimal time-slots of the growing season. I sure would like to see the US Congress discuss my speculation on building 'Federal Reserve Banks of I-NPK'. Time will tell.

10 Year EU-27 Fertilizer Consumption Forecast from the European Fertilizer Manufacturers Association [EFMA]

Quick Summary article:

http://cms.efma.org/EPUB/easnet.dll/ExecReq/Page?eas:template_im=000BC2&...
------------------------------
..This is still a substantial negative trend from the consumption peak of the Seventies and the Eighties: by 2017, nitrogen will have decreased by 28% in the EU-27, compared to 1986 when the nitrogen consumption peaked. There will also be a decrease of 67% phosphorus and 61% potassium, compared to 1979, when the consumption of phosphorus and potassium peaked.
------------------------------
And from the original websource:

For Europe, the balance between food and energy is also relevant. Europe is already too dependent on imported energy.

The positive development of the European renewable energy production will change this situation only marginally. However, Europe must, under all circumstances, guarantee an independent food supply to her citizens.

Therefore, besides the natural mechanisms of the market forces, certain strategic guidance is needed from European policies regarding what will be produced on the different plots of the European fields – should it be food for the Europeans or for export, biomass for energy or industrial raw materials?
-------------------------------------------
IMO, we will be just screaming our heads off on the 'Hubbert Downslope Rollercoaster Ride' by 2017: it will be fascinating to see how accurate this forecast will have proven to be at that future point.

That Xcel story is pretty funny. So they shut down two plants because of CO2, the deadly toxic carbon dioxide! What a great idea. Hey why not shut down 20 coal fired power plants? That way we can charge even more for electricity!

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